The Memory Trade: Samsung's Record Breaking Profit

**Josh** (0:00)
Samsung just became the most profitable company in the world, but nobody actually understands what they make. I feel like when I think about Samsung, I think smartphones or computers. But the reality is, is that almost 96% of their company's profits come from a single entity, and that's memory. And when we think about memory, we've talked about this in the past, there are three main providers. Two of those three just so happened to exist in Korea. So what are two of the most profitable companies doing in the same country? And what are they doing to unlock all this value? And then what are the implications of this across the entire market? That's what we're going to get into today on this episode. Ejaaz, what's going on with Samsung? How is this even possible? I feel like Samsung was the company that people buy Android phones from, not the most valuable company, profitable company, I should say, in the world. Yeah, I know.

**Ejaaz** (0:43)
I remember as a kid, a bunch of my friends had Samsung phones, and that's all I knew them for. So when I heard the name come up repeatedly over the last year and a half or two years, I was like, okay, what is this company doing different now? Firstly, some of the headline numbers, Samsung recorded their quarterly profit, Q2, at $58.5 billion. Now, this was surprising to many analysts because they were expecting it to be 55 So they overachieved by around $3 billion. But the larger headline reasoning behind this is, they absolutely crushed Nvidia, who only came in at a measly $53 billion. Now, obviously, it's a crazy chart.
Obviously, I'm jesting, but the point I'm trying to make here is, why has Samsung been able to achieve so much profit? You mentioned earlier that 94% of their profit over the last year and a half has come from one single department in their company, and that is AI memory. Samsung is currently the number two largest provider of something known as HBM, high bandwidth memory. In order to understand why this is such a useful commodity, every single GPU that Nvidia sells, every single TPU that Google makes, any type of AI chip or AI hardware, quite frankly, requires a ton of memory. And emphasis on the word ton, because typically, consumer devices, your laptop, your computers, require just a standard, pretty predictable amount of memory. But AI memory in particular has been quite exponential. So Samsung is one of three major providers, and because they own a relative monopoly on this industry, they've been able to hike prices up massively. Now, I know I'm throwing out big numbers here, but to help you understand why this is such a gargantuan amount of money to make over three months, we're roughly talking about $650 million per day or $27 million per hour. So this is more money than the most valuable company in the world makes, yet Samsung isn't the most valuable company in the world.
In Korea, right next to it, in the number two position is SK Hynix, which is relatively their sister company, or not their sister company, but their sister company in terms of memory, who is the number one AI memory provider. So there's some really unique motes being formed in Korea, and it's weird because typically in the West, you largely have the monopolies in tech, and now we're seeing it in Asia, specifically Korea.

**Josh** (3:13)
Another fun fact, if you actually scroll up to the top of this artifact, we distilled it down to seconds, that's $7,500 per second that this company makes, which is remarkable because going back down to that other chart, I mean, we see the little bar on the bottom here that shows Samsung Q2 2025 at $3.4 billion. For those of you who are a little confused about years, 2025 was last year. That was a year ago. They're making 3.4 billion, and now they've surpassed NVIDIA at 58.5. So what on earth is going on? What is going on with this memory?
I think the essence is, like you mentioned, Ejaaz, every computer needs two things. It needs the workbench, which is the memory, and then it needs the filing cabinet, which is the NAND. And there's only three companies that make virtually all of this.
Each company kind of has their specialty.
There's DRAM first, which we commonly reference as the workbench. It's the RAM inside of your gaming PC. So if you've ever built a gaming PC or if you've ever been on new egg shopping around, you'll recognize this term called DDR5. That's the fast memory. That's the temporary RAM a lot of people call it, and it gets wiped when you turn off your computer. Then there's NAND, which is more closer to the filing cabinet. It's your SSD. So if you have an iPhone, chances are you have NAND Flash inside of your iPhone. That is a little bit slower, but much cheaper per gigabyte. And then there's HBM, high bandwidth memory, which is the AI stuff. And that's the reason for everything taking place right now. And those DRAM chips, we've described this before, they're basically stacked up and they're 12 to 16 stories high, kind of like a skyscraper of memory. And it uses this incredibly complicated thing. Now, SK Hynix, one of these two companies we've mentioned, they own about 60 percent of the entire HBM market. So any AI chip that gets built, chances are it's gone through them. And that's why so much of this monopoly has started to form and that's why so much of these profit margins has begun to expand, is because there are three companies in charge of this bottleneck that controls the entirety of the AI market. And you could see here kind of a visual of what this looks like, DRAM next to NAND, next to HBM, and Samsung and SK Hynix in particular just so happen to both be the Korean superstars that are making this reality possible right now.